Building a House – Get a Construction Cost Estimate

After the Architect or Building Designer has produced drawings of your proposed house, you have to calculate the cost of construction. One of the mistakes that clients make is leaving building cost estimating in the hands of the contractor or an engineer who is working on the project. Let’s be honest, a building contractor or structural engineer are not the best estimators or cost managers. These two professionals might have done costing as part of the Construction Management and Structural Engineering curriculum respectively, but this does not make them specialists in estimating or quantity surveying. Quantity Surveying courses also include basic subjects in Engineering but this does not qualify a QS to be a Structural Engineer.

In order to get a high quality estimate that is accurate, complete and valuable, you should consult a Quantity Surveyor or certified Construction Estimator. There are a lot of essential details that contractors and engineers will miss when quantifying a plan and pricing the quantities. The type of estimate produced in this case does not follow the Standard System of Measurement used by Quantity Surveyors. Most of the times, it’s not clear if the rates are inclusive of labour, subcontractors and mark up. Items and trades are not organized or defined properly. More often, the estimate is based on construction activities, but there is no composite rate build up to take account of all constituent components in the activity. Since the engineer is not guided by standard QS guidelines, the estimate is more likely to be subjective, prepared according to the engineer’s view of costing elements. A lot of items that you would find in a BOQ would be missing including preliminaries, contingencies, escalation and provisional sums. Above all, an estimate prepared by an unqualified consultant will lack descriptive detail that is required for contractor pricing and purchasing items. If roof installation has been measured as an activity, which items have been included? Does the rate or sum include roof covering, insulation, trusses and brandering? Are the estimated quantities based on supplier quotes or have they been methodically calculated? Is it an estimate for purchasing materials or is it for bidding?

You can send the same house plan for estimating to different parties – the contractor, engineer, certified construction estimator, quantity surveyor (QS), project managers etc, and you will see a big difference between the estimates. The estimate by the QS and certified Estimator is far more reliable, accurate and complete.

Why Should You Get a Cost Estimate?

Budgeting

A building cost estimate allows you to budget enough money for the project. You will know in advance the anticipated cost of building your proposed house, enabling you to make critical decisions. When you approach a bank or financier for a loan you should furnish them with your cost estimate. Make sure that contingencies as well as price escalations are included in the bank. Escalation should be factored in when a contract is expected to run several months, at least 12 months duration.

Decision Making

A cost estimate allows you to make decisions, whether to continue with your project or wait until you have the required funds. You can go on a fund-raising campaign to raise a figure that is within your contract value range.

Changes

Instead of abandoning your proposed project or fund-raising to get building capital, you can choose to make changes to the architectural house plans. With the help of an architect or building designer, look for items that are taking up too much cost. Decide if you want to substitute the items or remove them. Changes can be made to floor finishes, wall finishes, plan shape, number of rooms and other elements. The aim is to reduce the cost to the desired budget. Half a loaf is better than nothing. It’s better to build a small home than abort a huge project which failed to take off due to lack of funds.

When you have enough funds for your project, the project will run smoothly during the construction phase. Having enough capital in the bank means your project has passed the financial feasibility test. Financial feasibility should be a top priority in any project. Construction financing ensures that workers are paid on time, which provides an incentive for maintaining productivity and finishing the project before the deadline. According to clauses contained in the preliminaries section of the Bills of Quantities, a contractor can be penalized for delaying the project. However, if the delays are caused by late payments and circumstances beyond the control of the contractor, the client should take blame.

Types of Cost Estimates Available in the Design Stage and Contract Period

In your pursuit of getting a Quantity Surveyor or Construction Estimator, you have to understand that an estimate is as good as the extent of the drawings. An estimate depends on the information provided by the architect. Architectural drawings take time to develop, therefore in the early stage of the project there might not be sufficient specifications to work with. In this case, the Estimator has to work with available information. The earliest cost estimate that you can have is based on the Unit Method of estimating and the Superficial Floor Area Method.

Cost Per Unit Method

In the Unit Method, a house estimate can be produced even if there are no sketch drawings. The client is required to state the number of bedrooms required, whether it should be a single family unit or multi-family dwelling. The client can also prescribe the materials for the building envelope i.e. will it be a brick, stone or timber house? For a house, rooms are the main units. The number of rooms is multiplied by the known cost per room.

In the Superficial Floor Area Method, sketch drawings of the floor plan are required including the type of floor finishes and room dimensions. With this information, a reliable cost estimate can be produced within a short time using the Cost per Square Metre.

Elemental Estimate and Approximate Quantities

At a later stage during the pre-contract period, the architect will produce detailed drawings with full specifications. These drawings have fully detailed wall elevations, substructure, superstructure, roof structure, roof coverings, sanitary fittings, joinery, floor finishes, wall finishes, drainage and external works. This is a time for the Estimator to produce detailed estimates such as the Elemental Estimate and Approximate Quantities.

Bills of Quantities

For tendering and contract management purposes, detailed Bills of Quantities which contain contract clauses are produced. Bills of Quantities are the most detailed cost documents which are needed for any construction project. This document will be used throughout the construction stage for cost management, valuations, final account payments and closing the contract.